If you’re in your 50s and hear that the “average” net worth for people in your age group is over $1 million, you might be tempted to pop a bottle of champagne or stress about why you’re not feeling like a millionaire.
Before jumping to conclusions, it’s worth unpacking what those numbers mean and why most people don’t have a seven-figure bank account despite what the averages suggest.
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A Tale of Two Metrics: Average vs. Median
First, the million-dollar figure comes from the average net worth, which is calculated by dividing the total wealth of a group by the number of people in that group. Sounds straightforward, right? The problem is, a few ultra-wealthy individuals – think tech billionaires and hedge fund moguls – can skew the average way up.
Now, the median net worth paints a much more relatable picture. This is the midpoint value, where half of the group has more and half has less. For people in their 50s, the median net worth ranges from $272,800 (ages 50-54) to $320,700 (ages 55-59), according to the Federal Reserve’s latest data. That’s a far cry from $1 million and much closer to what the “average Joe” in their 50s might experience.
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Why the Big Discrepancy?
The disparity comes down to who’s pulling the strings – or in this case, the averages. For every billionaire, there are millions of people with far less wealth and the average lumps all those numbers together. Here’s a breakdown of average and median net worth by age group:
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Ages 50-54: Average: $1,132,532 | Median: $272,800
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Ages 55-59: Average: $1,442,075 | Median: $320,700
By comparison, people in their 40s have average net worths between $590,718 and $781,923, with medians sitting far lower. This trend shows that while wealth tends to grow with age, it’s not growing equally for everyone.
What’s Driving Net Worth in Your 50s?
Several factors contribute to net worth during this phase of life. Home equity is often significant, thanks to years of mortgage payments or soaring real estate prices. Retirement accounts like 401(k)s and IRAs usually account for another chunk and some people have investment portfolios or even business equity boosting their bottom line.
